Sometimes It’s Good to Have the DTs (Decision-Tree Analyses) in Mediation

Joseph R. Soraghan

By Joseph R. Soraghan

In my Med-Arb Memo of August 2010, I pointed out that a formal mediation session actually should be considered as just one part of a possible multi-part process.

I just read an interesting article suggesting that disputing parties each hire a (separate) consultant to perform decision-tree (DT) analyses when entering into negotiation or mediation.[1] The article argues, and cites instances in which, the hiring of neutral consultants by both parties to the dispute to perform DT analyses led to a greater number of resolutions of those disputes.[2] For many disputes, particularly high-dollar disputes, this is an excellent idea.

But use of DT and other risk analyses and probability assessments in mediation should not be restricted to use of expensive analytic consultants. The parties and the mediator should consider using them without consultants, with much less expense.

DT analysis in litigation is not rocket science. It simply calls on each party (or counsel) to (honestly) analyze and decide the following: the ultimate issues (those whose outcomes individually or in combination would be dispositive of the case with respect to liability, plus those comprising the major components of damages) on issues which each party must prevail in the case in its entirety; and finally, to assess (again, honestly) the percentage likelihood of prevailing on each such issue. At each step in the analyses, of course, the likelihood of success on each issue being less than 100%, the likelihood of total success is discounted.

An excellent process structure may have a mediator inviting counsel to each party, for their own benefit, to go to the effort of performing the DT analysis, submitting completed analyses to the mediator. DT analyses have at least two steps: (1) deciding the ultimate issues; and (2) attaching a tangible value – usually a percentage – to the likelihood of prevailing on that ultimate issue. Usually, counsel address (1) above (their view of the issues) in pre-mediation briefs submitted to the mediator, but typically do not attach tangible valuation to the likelihood of prevailing on each such issue. But doing so requires and adds a recognition of risks which, when performed early enough by both parties, would significantly increase the ability of the mediator (and the parties) to facilitate a resolution at the mediation session(s).

Likely, even counsel who agree to disclose their pre-mediation briefs to opposing counsel may not want to so disclose their DT analyses. The mediator will, of course, comply with that request. Indeed, to encourage a more realistic and honest analysis, when requesting the analyses the mediator may want to state outright that they will not be disclosed to the opposing counsel/party.

At the very least, the analysis of both the issues thought by opposing counsel to be “ultimate” in step (1) and the risk values attached in step (2) by opposing counsel to the likelihood of prevailing on each ultimate issue constitute significantly greater information to the mediator in recognizing the obstacles to a resolution.

 


[1] Victor, Resolving a Dispute by Getting a Neutral to Provide Probability Assessments, Westlaw, 31 Alternatives to High Cost Litigation 36 (Database 31 ALTHCL 36, 2013).

[2] For example, in one instance the parties hired three neutral analysts to review the mediation briefs and to review or prepare decision-tree analyses and to provide their probability assessments of success to each of the parties.

Posted by Attorney Joseph R. Soraghan. Soraghan practices in legal matters pertaining to business operations and growth. He guides businesses in financing, contracts, acquisitions, mergers, and sales. Soraghan frequently resolves commercial disputes as an arbitrator or mediator, or through litigation.


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